Gerald L. Farrar
Contributing Editor
Continuing a trend starting in the early 1980s, the Nelson-Farrar refinery construction index has risen moderately. Indicative of this trend, the index rose from 1265.8 in January 1992 to 1334.7 in December 1994. The labor component of the index rose at a more rapid pace than did the material component.
The labor index rose from 1558.1 to 1645.3 over the 2-year period, while the material index rose only 51.5 points, from 827.4 to 868.9.
The miscellaneous equipment index rose only 6 points during the 2-year comparison period. The category includes pumps and compressors, electrical equipment, heat exchangers, instruments, and engines. They are thus manufactured items, and their costs are a measure of manufacturing efficiency.
The Nelson-Farrar refining operation index increased 9.1 points, from 385.7 to 394.8 in the 1992-1993 period. The process unit index also showed a small increase in the period, rising from 385.7 to 394.8.
These two indexes varied somewhat randomly, showing month-to-month cost variations without any masking effect. Changes in the cost of refinery fuel accounted for much of the oscillation. Continuing increases in refinery operating efficiency helped stabilize values of both indexes.
